Correlation Between PetroChina and APT Medical

Can any of the company-specific risk be diversified away by investing in both PetroChina and APT Medical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PetroChina and APT Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PetroChina Co Ltd and APT Medical, you can compare the effects of market volatilities on PetroChina and APT Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PetroChina with a short position of APT Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and APT Medical.

Diversification Opportunities for PetroChina and APT Medical

0.36

Correlation Coefficient

PetroChina  APT Medical

Weak diversification

The 3 months correlation between PetroChina and APT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and APT Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Medical and PetroChina is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PetroChina Co Ltd are associated (or correlated) with APT Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Medical has no effect on the direction of PetroChina i.e., PetroChina and APT Medical go up and down completely randomly.

Pair Corralation between PetroChina and APT Medical

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the APT Medical. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 1.74 times less risky than APT Medical. The stock trades about -0.07 of its potential returns per unit of risk. The APT Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  34,505  in APT Medical on September 2, 2024 and sell it today you would earn a total of  1,757  from holding APT Medical or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PetroChina Co Ltd  vs.  APT Medical

PetroChina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroChina Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

APT Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in APT Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, APT Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PetroChina and APT Medical

The main advantage of trading using opposite PetroChina and APT Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, APT Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in APT Medical will offset losses from the drop in APT Medical's long position.

The idea behind PetroChina Co Ltd and APT Medical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.